Offer of employment and employment contracts: What startups need to know

An offer of employment is a legal contract between an employee and your organization. This document should clearly state the terms and conditions for both parties. Before entering into such a contract, review the Ontario Employment Standards Act and seek legal advice as necessary.

There are two types of employment contracts that should be considered:

A fixed-term contract that has an expiry date

An indeterminate contract that has no expiry date

Preparing the offer of employment

When preparing an offer of employment, certain information must be included to ensure a comprehensive employment contract. Make sure you:

Make clear whether this is a fixed-term or indeterminate contract

State the date the employment contract will begin and with whom the contract is made

Making the offer

In most circumstances, the initial offer of employment will be made verbally over the phone. This should be done as soon as possible in case the candidate has been looking for opportunities elsewhere.

The offer should be explained in accordance with the employment contract specifications above. There may be negotiations over certain aspects, including compensation, timing or legal restrictions. The candidate should be given a short period of time to consider the offer, which can be negotiated. Typically, other candidates are not contacted until this offer is accepted (or declined).

Stipulate that any verbal offer is conditional upon signing a written agreement and that the candidate must sign a copy of all required documentation prior to their start date.

Offers of employment: Tips

Bear in mind that while it is not legally required to have a written employment contract in Ontario, it is highly recommended to have one to ensure both parties understand the employment relationship

Hire a lawyer to review and/or create your standard employment contract to ensure that legal clauses and all important elements have been included

Always have at least two people review each offer to avoid errors and omissions in the contract

Include a clause stating that the organization retains the right to amend the contract with proper notice and cause (for example, for aspects such as job responsibilities, reporting relationships or group benefits)

If any reference checks are still outstanding when making the offer, make sure that the written employment agreement states that the verbal offer is conditional upon satisfactory references